1. The Field of the Invention.
This invention relates generally to financial transactions via telephone. More specifically, the present invention provides a method and apparatus for accomplishing a credit card purchase utilizing facsimile technology and internet access, thereby avoiding the dedicated credit card transaction equipment which is typically required.
2. The State of the Art
The state of the art process for making credit card transactions is efficient but costly. It is costly in that to process credit card transactions requires purchasing or renting the equipment necessary for making the transactions. Furthermore, there are additional charges involved. Specifically, there is an access fee charged to those who want to approve a credit card transaction.
The apparatus described above is typically arranged as shown in prior art FIG. 1. FIG. 1 shows a credit card magnetic reader machine 10. The magnetic reader 10 is also known as and will be referred to hereinafter as a “swipe” machine which describes the motion of placing a credit card along a track or channel 12 in the swipe machine 10, and then pulling the credit card through the channel. As the credit card is pulled through the channel 12, information stored on a magnetic strip on the credit card is “read” and transmitted to a credit card processing center 14. To transmit the information from the credit card to the processing center 14 typically requires the use of a dedicated telephone line 16. The swipe machine 10 is electrically coupled to a telephone 18 or directly to the dedicated telephone line 16.
The process of transacting a purchase utilizing the swipe machine 10 can be as follows. First, a customer provides the credit card to a merchant. The merchant initializes the swipe machine 10 by activating a connection between the swipe machine 10 and the processing center 14. Activating the connection can be as simple as swiping the credit card through the swipe machine 10, or pressing a button which causes the swipe machine to make a call to the processing center 14. After the connection is established, the credit card is swiped through the channel 12, or if already swiped, the information which typically includes the unique credit card number is transmitted to the processing center 14. Along with the unique credit card number, the merchant also transmits a purchase amount which is to be transferred electronically. As the name implies, the transfer is typically a crediting of a merchant's account by debiting of the customer's credit card account by posting a charge against the account.
At this stage of the process, the merchant typically returns the credit card to the customer because it will probably not be needed again. The processing center 14 is now typically using the unique credit card number to locate an account which is associated therewith. After the account is located, the processing center 14 determines whether the purchase amount entered by the merchant exceeds the credit limit of the credit card account. If the credit limit is not exceeded, the processing center 14 transmits an approval code back to the merchant. If the transaction is approved, the customer then leaves with the purchase.
The process described above can vary slightly for many reasons. For instance, the process can vary according to the type of credit card account which is being utilized for the transaction. For example, even if a credit limit is exceeded, the transaction might still be approved, within certain limits. Other variations include automating the process so that the credit card is swiped by the machinery, and only the purchase price has to be manually entered. However, none of these variations are particularly relevant to the present invention. What is important to learn from the background information above is that typically no transaction takes place without having a swipe machine 10 which can read the credit card number from the credit card. Furthermore, the swipe machine 10 functions as a dedicated link to the processing center 14, supplying the necessary information for the processing center 14 to determine whether the transaction is allowable in light of a credit limit and present debt associated with the credit card number.
It should be apparent from the explanation above that the equipment necessary for setting up a merchant with the ability to make credit card transactions is simply a credit card swipe machine 10. However, the fee structure associated with the swipe machine 10 is surprising. For instance, the typical cost of a swipe machine 10 is around $1000. Even if a swipe machine is rented, the cost is typically around $40.00 per month. Furthermore, there is typically a fee associated with accessing the processing center 14 via a swipe machine 10.
It would be an improvement over the state of the art to provide a method and apparatus for making credit card transactions which did not require the use of a credit card swipe machine. It would be a further improvement to eliminate or substantially reduce initial start-up costs of making credit card transactions, and possibly reduce the cost of accessing the processing center information.